Friday, December 20, 2013

Yellow in the Red

YRC
asks Teamsters for continued concessions in struggle to regain profitability.

As a general rule, throwing yourself
on the mercy of the International Brotherhood of Teamsters is not a winning
strategy. It’s been working for YRC Worldwide, though, and the nation’s second
largest trucking operator really doesn’t have a choice.With $1.36 billion in debt, and a troubled restructuring that got the red ink
flowing again after a brief return to profitability, YRC faces creditors who
are demanding an extension of Teamster concessions through 2019 before agreeing
to refinancing of the carrier’s obligations, and allowing it to avoid
bankruptcy. YRC Teamsters agreed to a 15 percent cut in wages in 2009 and 2010,
as well as a long-term reduction in pension contributions, concessions that
were extended in 2010 through 2015.The LTL carrier, which has lost more than $3 billion since 2006, has not yet
released its proposals, so it’s not known exactly what concessions or changes
are on the table. Citing “enormous sacrifices” already by YRC workers, the
Teamsters union isn’t recommending a “yes” or “no” vote, Teamsters National Freight
Division Director Tyson Johnson said, but “voted to allow the company’s
proposal to go before members so that they can cast a secret-ballot vote,”
reported the Journal of Commerce.YRC Worldwide has reduced losses substantially since CEO James Welch arrived in
2011, but is still far from being in the black. The company lost $44.4 million
in the third quarter.Most of YRC’s troubles are at YRC Freight, but the company’s rapidly rising
interest expense on debt also threatens its survival. YRC Worldwide paid $43.1
million in interest last quarter. YRC’s three regional LTL operating companies
— Holland, New Penn and Reddaway — returned to profit in 2010 and doubled their
combined net income last year to $70 million.For those of us on the shippers side, it wouldn't be in any of our interests
for YRC to go Chapter 11. That would eliminate one significant option and tend
to make the surviving carriers even less willing to price aggressively than they
have been recently.Kirk ShearerPresidentTOTALogistix, Inc.www.totalogistix.com1-800-989-0054 x103

About TOTALogistix

TOTALogistix is a privately held corporation headquartered in Sparta, NJ. We helped define the Third Party Logistics Industry in 1991. Today we provide a wide spectrum of transportation and related supply chain management services to manufacturers, retailers and distributors throughout North America.
In our 20+ years in business, we’ve saved money for nine out of ten companies whose transportation we’ve analyzed. We’re confident we can do the same for you. Improving logistics performance starts here.